Market Overview

SBT Bancorp, Inc. Reports First Quarter 2017 Results

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SBT Bancorp, Inc. (the "Company"), (OTCQX:SBTB), holding company for
The Simsbury Bank & Trust Company, Inc. (the "Bank"), today announced
net income of $502 thousand or $0.37 basic and $0.37 diluted earnings
per share for the quarter ended March 31, 2017, compared to a net income
of $206 thousand or $0.15 basic and $0.15 diluted earnings per share for
the prior year's first quarter.

Net interest and dividend income increased $367 thousand or 11.5% as
compared to the prior year's first quarter primarily due to growth in
the Bank's commercial and consumer loan portfolios. Gain on sale of
mortgages increased 7.7% to $223 thousand compared to the quarter ended
March 31, 2016. Mortgage loan servicing activities income increased $232
thousand due to an increase in the mortgage servicing rights valuation
as result of the rise in long-term interest rates and related decrease
in implied prepayment rates.

"We are very pleased to report significantly improved earnings for the
first quarter of 2017 resulting principally from commercial loan growth,
increased noninterest income and very low growth in noninterest
expenses," said Simsbury Bank President & CEO Martin J. Geitz. "Our net
income for the quarter ended March 31, 2017 increased $296 thousand
(143.7%) over the prior year period ended March 31, 2016. Most of our
balance sheet growth came from a 29.7% increase in commercial loans
since the end of the prior year first quarter as our focus on serving
the needs of privately owned businesses continues to gain momentum."

Key highlights for quarter ended March 31, 2017 compared to quarter
ended March 31, 2016 included:

  • Net Income increased 143.7%.
  • Total revenue, consisting of net interest and dividend income plus
    noninterest income, increased $543 thousand or 14.9%.
  • Net interest and dividend income increased 11.5% to $3.6 million.
  • Provision for loan losses totaled $250 thousand, an increase of $119
    thousand compared to the quarter ended March 31, 2016. The allowance
    for loan losses at March 31, 2017 was 0.95% of total gross loans.
  • Net loans grew $59.5 million or 17.3%.
  • Commercial loan balances increased $41.0 million or 29.7% to $178.9
    million compared to March 31, 2016.
  • Consumer loans grew $11.6 million or 17.1% to $79.5 million driven by
    increases in home equity loans and the purchase of student loans in
    2016.
  • Total deposits increased $43.8 million or 11.4% to $427 million,
    driven by increases in demand deposits of $ 7.1 million, savings and
    NOW deposits of $24.3 million, and time deposits of $12.4 million.

The Company's allowance for loan losses at March 31, 2017 was 0.95% of
total gross loans. The Company had non-accrual loans totaling $3.5
million or 0.87% of total loans on March 31, 2017, compared to
non-accrual loans totaling $3.8 million or 1.09% of total loans a year
ago. Total non-accrual and delinquent loans on March 31, 2017 was 0.99%
of loans outstanding compared to 1.72% on March 31, 2016.

Total deposits on March 31, 2017 were $427 million, an increase of $43.8
million or 11.4% over a year ago. At quarter end, 41% of total deposits
were in non-interest bearing demand accounts, 43% were in low-cost
savings, money market and NOW accounts and 16% were in time deposits.

For the quarter ended March 31, 2017, total net revenues, consisting of
net interest and dividend income plus noninterest income, were $4.2
million compared to $3.6 million for the same period in 2016, an
increase of $542 thousand or 14.9% above the prior year's first quarter.
Net interest and dividend income increased $367 thousand or 11.5%,
primarily driven by a $583 thousand, or 19%, increase in interest and
fees on loans. The increase was partially offset by decreased interest
income on securities of $52 thousand. Noninterest income increased by
$176 thousand or 38.3%, primarily due to an increase in mortgage
servicing activities of $232 thousand.

The Company's year-to-date 2017 taxable-equivalent net interest margin
(taxable-equivalent net interest and dividend income divided by average
earning assets) was 2.99% compared to 3.06% for the comparable 2016
period. The Company's yield on earning assets increased 4 basis points
to 3.38% and the cost of funds increased 14 basis points to 0.55%,
primarily driven by the subordinated debt interest.

Total noninterest expense for the first quarter 2017 was $3.3 million,
equivalent to the first quarter of 2016.

Capital levels for The Simsbury Bank & Trust Company on March 31, 2017
remain above the regulatory "well-capitalized" designation. Capital
ratios are calculated under Basel III rules.

 

Capital Ratios
March 31, 2017

       

Simsbury Bank &
Trust Company

   

Regulatory Standard For
Well-Capitalized

Tier 1 Leverage Capital Ratio       7.38%     5.00%
Tier 1 Risk-Based Capital Ratio       10.85%     8.00%
Total Risk-Based Capital Ratio       11.96%     10.00%
Common Equity Tier 1 Risk-Based Capital Ratio       10.85%     6.50%
         

Simsbury Bank is an independent, community bank for consumers and
businesses based in Connecticut. Simsbury Bank Home Loans is a division
of Simsbury Bank serving the home financing needs of consumers
throughout Southern New England. Simsbury Bank is wholly-owned by
publicly traded SBT Bancorp, Inc. Its stock is traded on the OTCQX
marketplace under the ticker symbol of SBTB. For more information, visit www.simsburybank.com.

Certain statements in this press release, including statements regarding
the intent, belief or current expectations of SBT Bancorp, Inc., The
Simsbury Bank & Trust Company, or their directors or officers, are
"forward-looking" statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995). Because such statements are
subject to risks and uncertainties, actual results may differ materially
from those expressed or implied by such forward-looking statements.

 
SBT Bancorp, Inc. and Subsidiary
Consolidated Balance Sheets
March 31, 2017, December 31, 2016 and March 31, 2016
     
(Dollars in thousands, except for share amounts)
       
  3/31/2017     12/31/2016     3/31/2016  
(unaudited) (unaudited)

ASSETS

Cash and due from banks 8,251 10,976 6,111
Interest-bearing deposits with Federal Reserve Bank of Boston
and Federal Home Loan Bank 11,586 9,786 5,867
Money Market Mutual Funds 634 95 393
Federal funds sold   157     150     200  
Cash and cash equivalents 20,628 21,007 12,571
 
Certificates of Deposit 1,250 1,250 1,500
 
Investments in available-for-sale securities (at fair value) 59,665 58,728 72,874
Federal Home Loan Bank stock, at cost 2,187 2,896 2,009
 
Loans held-for-sale 747 2,801 1,187
 
Loans outstanding 407,080 409,164 346,863
Less allowance for loan losses   3,869     3,753     3,160  
Loans, net   403,211     405,411     343,703  
 
Premises and equipment, net 1,841 1,905 1,688
Accrued interest receivable 1,222 1,301 1,161
Other real estate owned 570 - -
Bank owned life insurance 9,191 9,130 8,940
Other assets   5,223     5,570     4,831  
Total other assets   18,047     17,906     16,620  
 
 
TOTAL ASSETS $ 505,735   $ 509,999   $ 450,464  
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Demand deposits $ 130,982 $ 134,341 $ 123,904
Savings and NOW deposits 228,491 212,835 204,187
Time deposits   67,568     66,588     55,121  
Total deposits 427,041 413,764 383,212
 
Securities sold under agreements to repurchase 2,425 2,694 1,988
Federal Home Loan Bank advances 36,318 54,058 26,000
Long-term subordinated debt 7,259 7,252 7,230
Other liabilities   1,924     1,944     1,621  
Total liabilities   474,967     479,712     420,051  
 
Stockholders' equity:
Common stock, no par value; authorized 2,000,000 shares;
issued and outstanding shares and shares, respectively, 1,372,823
and 1,372,409 at
March 31, 2017; 1,372,394 shares and 1,371,980 shares,
respectively, at
December 31, 2016, and 1,361,103 shares and 1,360,689 shares,
respectively, at March 31, 2016
19,146 19,133 18,871
Retained earnings 12,330 12,017 11,305
Treasury stock, 414 shares (7 ) (7 ) (7 )
Unearned compensation- restricted stock awards (258 ) (293 ) (172 )
Accumulated other comprehensive (loss) income   (443 )   (563 )   416  
Total stockholders' equity   30,768     30,287     30,413  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 505,735   $ 509,999   $ 450,464  
 

         
SBT Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)
 
(Dollars in thousands, except for share and per share amounts)
 
For the quarter ended
  3/31/2017     3/31/2016  
 
Interest and dividend income:
Interest and fees on loans $ 3,658 $ 3,075
Investment securities 338 390
Federal funds sold and overnight deposits   30     23  
Total interest and dividend income   4,026     3,488  
 
Interest expense:
Deposits 265 159
Repurchase agreements 2 1
Long-term subordinated debt 134 107
Federal Home Loan Bank advances   69     32  
Total interest expense   470     299  
 
Net interest and dividend income 3,556 3,189
 
Provision for loan losses   250     131  
 
Net interest and dividend income after
provision for loan losses   3,306     3,058  
 
Noninterest income:
Service charges on deposit accounts 92 90
(Loss) gain on available-for-sale securities (1 ) 47
Other service charges and fees 189 233
Increase in cash surrender value
of life insurance policies 61 51
Mortgage loan servicing activities 19 (213 )
Gain on sale of mortgages 223 207
Investment services fees and commissions 29 27
Other income   23     17  
Total noninterest income   635     459  
 
Noninterest expense:
Salaries and employee benefits 1,693 1,830
Occupancy expense 383 370
Equipment expense 109 93
Advertising and promotions 101 107
Forms and supplies 26 39
Professional fees 200 84
Directors' fees 58 53
Correspondent charges 66 72
FDIC Assessment 111 62
Data Processing Fees 229 213
Internet banking costs 44 53
Other expenses   313     342  
Total noninterest expense   3,333     3,318  
 
Income before income taxes 608 199
Income tax provision (benefit)   106     (7 )
 
Net income $ 502   $ 206  
 
Net income available to common stockholders $ 502   $ 206  
 
Average shares outstanding, basic 1,358,142 1,348,572
Earnings per common share, basic $ 0.37   $ 0.15  
 
Average shares outstanding, assuming dilution 1,360,776 1,350,507
Earnings per common share, assuming dilution $ 0.37   $ 0.15  
 

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